Lebanon’s failure to approve a string of crucial economic laws to pull the country back on its feet threatens the country’s future economic stability, caretaker Prime Minister Najib Mikati said on Thursday.
A financial meltdown that started in 2019 has weakened the currency by more than 90%, paralyzed the financial system and frozen depositors out of their savings. The government estimates the financial sector’s losses at over $70 billion, said Reuters.
Mikati said parliament should convene a special session that passes, in one package, long-pending plans to revamp the financial sector and restructure banks, to help overcome the crisis.
Mikati said four years had passed without a single draft financial reform act becoming law.
“All these need solutions immediately – if they are not resolved and the parliament does not convene and make it all some kind of one package to be decided on, there won’t be economic stability in the country,” he said in parliament after a session could not be convened for lack of a quorum.
Mikati said the failure to take action would push Lebanon “from one crisis to another.”
The crisis erupted after decades of profligate spending and corruption among the ruling elite, some of whom led banks that lent heavily to the state.
“I fear if we delay more in passing the legislation, the consequences will be very detrimental on the economy of the country,” Mikati said.
If the status quo continues, public debt could reach 547% of GDP by 2027, the IMF said recently.
Lebanon signed a staff-level agreement with the International Monetary Fund last year but has not met the conditions to secure a full program, which is seen as crucial for its recovery from one of the world’s worst financial crises.
The debt-strapped country was committed to the agreement with the IMF and the financial reforms needed to help obtain crucial donor support needed for recovery, Mikati added.